Tuesday, July 24, 2007

Trustees Deeds recorded, or the actual loss of a home to foreclosure, totaled 17,408 during the second quarter. That is the highest number in DataQuick’s statistics, which go back to 1988. That was up 57.8 percent from 11,032 for the previous quarter, and up 799.2 percent from 1,936 for last year’s second quarter. The prior peak of foreclosure sales was 15,418 in third-quarter 1996.......Roughly half, 54.6 percent, of the homeowners in default emerge from the foreclosure process by bringing their payments current, refinancing, or selling the home and paying off what they owe. A year ago it was 88.0 percent.

The number of defaults resulting in foreclosures is the highest since DataQuick began keeping records. The previous high was in early 1994, when about 30 percent of defaults resulted in foreclosures, Karevoll said....Homeowners received 53,943 default notices, more than double the 20,909 filed a year ago....Last quarter's default level was the highest since the fourth quarter of 1996, when 54,045 notices were recorded in California...The number of default notices sent to homeowners in California...has averaged 34,172 quarterly since DataQuick...began tracking the data in 1992.

When the increase in housing stock over the last decade is taken into account, foreclosures are running roughly equal with the 1996 peak...."We're clearly in for a worse third quarter and an even worse fourth quarter," said John Karevoll, chief analyst at DataQuick Information Systems, which compiled the data....Karevoll said the default numbers reflected a wide regional disparity. They were at record levels in Riverside, Contra Costa, Sacramento and most Central Valley counties, where many of the state's first-time buyers live.

Sacramento County, with 1,662 foreclosures and 3,840 notices of default, had the region's greatest share of foreclosure related activity.

"It's like that book, 'The Perfect Storm,'" said Sacramento real estate agent Carey Covey, a specialist in marketing homes repossessed by banks. "All the factors have come together to create this situation."

Theu even gave our Perfect Storm a plug in one of the articles. How prophetic!

Looks like rough water ahead. Most of problem hits in '08 and lingers into '09. If we're just on the cusp of this, I hardly doubt that we've seen the top in inventories and won't see them this year. Imho,monthly NOD and foreclosures will exceed monthly sales figures probably sometime in the late 3rd or 4th quarter. This will be the low water mark and a serious threat to prices that just seem to stay up longer than they should.

I thought the story in the Bee about the homeowners who had lived in their house for 26 years and lost it to foreclosure was interesting. I'm curious to know the percent of foreclosures that result from owners who overextend themselves with HELOCs, cash-out refi's, etc., as opposed to an initial purchase with an ARM. Also, the percent of foreclosures going to owners of 2nd homes/investors as opposed owner-occupied homes.

And since I'm asking for all kinds of information, how about the average amount that the banks lose on each foreclosure. I suspect that they aren't losing that much yet, that the homes are being resold for close to the amount that is owed, since the regional median home price is holding up quite well.